Tivo Inc. v. Dish Network Corp.
| Decision Date | 02 June 2009 |
| Docket Number | Civil Action No. 2:04-CV-01 (DF). |
| Citation | 640 F.Supp.2d 853 |
| Parties | TIVO INC., Plaintiff, v. DISH NETWORK CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Alexander Chester Giza, Andrei Iancu, Adam S. Hoffman, Brian D. Krechman, Christine W. S. Byrd, Laura W. Brill, Morgan Chu, Perry M. Goldberg, Richard E. Lyon, Irell & Manella LLP, Los Angeles, CA, Samuel Franklin Baxter, McKool Smith, Marshall, TX, Ben Yorks, Brian Jones, Irell & Manella, Newport Beach, CA, Nicholas H. Patton, Patton Tidwell & Schroeder, LLP, Texarkana, TX, R Scott Feldmann, Randall I. Erickson, Steven P. Rice, Van V. Nguyen, Crowell & Moring, Irvine, CA, Garret Wesley Chambers, McAkool Smith, Dallas, TX, for Plaintiff.
Alison M Tucher, Jason A. Crotty, Rachel Krevans, Harold J. McElhinny, Morrison & Foerster LLP, Robert M. Harkins, Jr., Howrey LLP, San Francisco, CA, Charles S. Barquist, Morrison & Foerster LLP, Los Angeles, CA, J Eric Elliff, Morrison & Foerster, Denver, CO, Karl J. Kramer, Morrison & Foerster, Palo Alto, CA, Damon Michael Young, Young Pickett & Lee, Texarkana, TX, for Defendants.
Before the Court are TiVo's Motion to Hold EchoStar In Contempt For Violation Of This Court's Permanent Injunction and the parties' Post-Hearing Proposed Findings of Fact and Conclusions of Law. Dkt. Nos. 832, 919, and 920. Also before the Court are the transcripts and evidence from hearings regarding EchoStar's alleged contempt; those hearings were held on September 4, 2008 (Dkt. Nos. 859-860) and on February 17-19, 2009 (Dkt. Nos. 907-915). Having considered the papers in light of the testimony, evidence, and relevant case law, the Court now addresses all issues raised by TiVo's motion to hold EchoStar in contempt.
This opinion will begin by discussing the background and procedural history of this case, which is both lengthy and complex. What follows is a brief discussion of the basic legal principles for contempt proceedings in patent cases. Specifically, this Court will outline the Federal Circuit's seminal case, KSM Fastening Systems, Inc. v. H.A. Jones Company, Inc., 776 F.2d 1522 (Fed.Cir.1985), and also address the relevance of particular evidence and the movant's burden of proof. Next, the opinion will analyze the modifications made to EchoStar's DVRs, that is whether the modified DVR software is more than colorably different from the adjudged software and whether the modified software continues to infringe TiVo's patent. Finally, the opinion will analyze EchoStar's alleged facial violation of this Court's injunction, that is whether EchoStar failed to comply with the specific directives of this Court's orders.
In this patent infringement action, tried to a jury in March of 2006, Plaintiff TiVo Inc. (hereafter "TiVo") accused Defendants EchoStar Communications Corporation,1 EchoStar DBS Corporation, EchoStar Technologies Corporation, EchoStar Satellite LLC, and EchoSphere LLC of infringing certain claims of U.S. Patent No. 6,233,389 ("the '389 Patent"). Dkt. No. 3 (Amended Complaint). Defendants (collectively referred to as "EchoStar") are a group of inter-related companies who together operate or support the satellite television service marketed as "Dish Network." EchoStar designs digital video recorders ("DVRs"), which are provided to customers as part of its satellite service. Such DVR technology is central to the '389 Patent, which is entitled "Multimedia Time Warping System" and generally describes a DVR system that allows for simultaneous storage and playback of television signals from sources such as cable and satellite providers.
At trial, TiVo accused EchoStar DVR receivers of infringing nine claims of the '389 Patent. Specifically, TiVo asserted claims 1, 5, 21, 23, 32, 36, and 52 (the "Hardware Claims"), as well as claims 31 and 61 (the "Software Claims"). The accused receivers fell into two categories depending on what processing chip controlled the DVR. The first category—containing model numbers DP-501, DP-508, and DP-510—operate using a chip from ST Microelectronics and are referred to as the "50X Products." The second category—containing model numbers DP-522, DP-625, DP-721, DP-921, and DP-942— operate using a Broadcom chip and are appropriately referred to as the "Broadcom Products."
In its verdict, the jury found that all asserted claims of the '389 Patent were valid and that EchoStar's accused DVRs infringed each of those claims. See Dkt. No. 690 (verdict form). Specifically, the jury found that the 50X Products literally infringed all claims, while the Broadcom Products literally infringed the Hardware Claims and infringed the Software Claims under the doctrine of equivalents. Finally, the jury awarded TiVo $73,991,964 in damages and found by clear and convincing evidence that EchoStar's infringement was willful.
Following the jury's verdict, EchoStar immediately assigned some of its best engineers the task of designing around the '389 Patent. Dkt. No. 919 at 71-74. Although this Court, as more fully explained below, enjoined EchoStar from further infringement and ordered it to disable the DVR capability in the infringing products, that order was stayed pending an appeal to the Federal Circuit. By the time that stay was lifted and this Court's injunction was once again in effect, EchoStar had long since downloaded its design-around effort—modified DVR software—into its DVR products. It is TiVo's position, however, that EchoStar never complied with this Court's order and to this date provides infringing DVR service to its customers on the very products that the jury found to infringe. As a result, TiVo requests that EchoStar be found in contempt. Dkt. No. 832. In response, EchoStar contends that it has successfully designed around the '389 Patent. Dkt. No. 839. As a result, EchoStar believes that this Court's injunction, meant to enjoin only infringing activities, cannot cover EchoStar's modified products. Id.
Following the jury verdict in its favor, TiVo asked this Court to issue an injunction prohibiting EchoStar from further infringement of the positions, this Court entered its Final Judgment and Permanent Injunction on August 17, 2006. Dkt. No. 776. This Court also denied EchoStar's request to stay the injunction pending appeal. Dkt. No. 773. The Court's injunction, as later amended by joint motion (Dkt. No. 800), reads:
Each Defendant, its officers, agents, servants, employees and attorneys, and those persons in active concert or participation with them who receive actual notice hereof, are hereby restrained and enjoined, pursuant to 35 U.S.C. § 283 and Fed.R.Civ.P. 65(d), from making, using, offering to sell, selling or importing in the United States, the Infringing Products, either alone or in combination with any other product and all other products that are only colorably different therefrom in the context of the Infringed Claims, whether individually or in combination with other products or as part of another product, and from otherwise infringing or inducing others to infringe the Infringed Claims of the '389 patent.
Defendants are hereby further ordered to, within thirty (30) days of the issuance of this order, disable the DVR functionality (i.e. disable all storage to and playback from a hard disk drive of television data) in all but 192,708 units of the Infringing Products that have been placed with an end user or subscriber. The DVR functionality, (i.e. disable all storage to and playback from a hard disk drive of television data) shall not be enabled in any new placement of the Infringing Products.
As can be seen, the injunction contained two major provisions. First, it contained an "Infringement Provision," which prohibited further infringement of the '389 Patent by the infringing DVRs. Second, it contained a "Disablement Provision," which required EchoStar to disable the DVR functionality, as specifically defined by the Court, in the infringing DVRs. The Disablement Provision did provide an exception for 192,708 DVR units, the number of units for which TiVo received lost profit damages and against which TiVo did not pursue an injunction. See Dkt. No. 747 at 16.
EchoStar took issue with the exact language of the Disablement Provision. Specifically, EchoStar argued that the provision was overbroad and EchoStar contended that the "appropriate scope of the injunction, if one were to issue, would enjoin only the provision of infringing DVR software to those boxes upon activation." Id. (emphasis added). TiVo opposed EchoStar's proposal and warned that it would be "an invitation for EchoStar to engage in mischief ... [and] would only result in EchoStar providing what it deemed as `non-infringing' DVR software to its already-found-to-be-infringing DVRs, creating the opportunity for interminable disputes to determine what exactly is `infringing DVR software.'" Dkt. No. 747 at 15. Such a dispute is presently before this Court.
While the parties were disputing the form that the injunction should take, EchoStar was already well on its way to implementing its design-around effort. Before this Court entered its Amended Final Judgment and Permanent Injunction on September 8, 2006, EchoStar's development efforts were so far advanced that it had obtained three written opinions of counsel. Id.; see also PX3028, PX3029, and PX3030. At that time, however, EchoStar had not informed this Court of any design-around efforts.
After this Court entered its permanent injunction, EchoStar asked the Federal Circuit to stay the injunction during EchoStar's pending...
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